How Direct-To-Consumer Is Driving The Need For Real-Time In Retail
By Thomas Hill, Kx Systems
Real-time is the latest in a
long line of terminology infiltrating the world of retail. So what is it, and
why do you need to care? Well, you don’t need to care, but Charles Darwin would
argue you should: “It’s not the strongest of the species that survive, nor the
most intelligent, it’s the one that most adapts to change.”
Technology is changing the
way we live, the way consumers shop and the way retailers need to operate. IT
terms like “real-time” are now commonplace in most meetings and it’s something
we all need to know and understand. Real-time retail technologies may or may
not have been invented by Amazon, but Amazon has enabled their exponential
growth and exploited them to become dominant in the new retail market.
Traditional retailers, like Maplin Electronics and Toys ‘R’ Us, that have not
been able to adapt quickly enough, have suffered as a result.
The Growth Of Technology And Data Is Leading To Changing Consumer Expectations
New data sources, such as that coming from sensors, is resulting in vast volumes of connected IoT data. Retailers need to be able to manage these data volumes effectively and utilize that knowledge to drive down costs while expanding sales. Understanding where every product and customer is will be hugely powerful in delivering the key retail principles of delivering the right product, at the right price, with an easy and fast shopping experience.
We are already seeing benefits of connected real-time data in retail today. Real-time fault detection in manufacturing is made possible by streaming IoT data. Improved fill rates, reducing waste and increasing availability are made possible through real-time demand data. Perhaps most importantly, research shows that brands are finding increased shopper loyalty through connection and personalization range across the customer journey.
Innovating through connected data is changing the way retailers deliver these principles in real time. Customers expect ease, personalization and value — and they want it immediately. A recent Kx survey of UK consumers revealed that these are the most important factors in retailer selection.
Argos uses real-time data within its connected supply chain and were identified as delivering the highest multi-channel performance in our survey. This is an example of the enhanced customer experience a retailer can offer by using real-time data, and one which customers enjoy. Today, it’s no longer the best brands that win, but those that are the easiest to shop with.
Marketplace And Direct-To-Consumer Are Accelerating In 2018
These emerging trends mean that brands that traditionally sold their products through retailers are now able to sell directly to the customers themselves. Marketplace platforms such as INS within fast-moving consumer goods (FMCG) will result in intensified competition as brands and retailers sell direct-to-consumers (D2C) in the same space. As D2C and supplier integration grow, we are hurtling towards a world of full transparency and individualized range personalization that will be key for both product and price.
Another interesting trend is dynamic pricing, which plays into the real-time evolution in retail. The practice saw a slight decline in 2017, as retailers quite rightly approached with caution due to consumers often being critical of the approach. However, our survey reveals that 76% of UK consumers use technology to help them find value when shopping. Range personalization will mean that product pricing will ultimately become one-to-one, where retailers deliver individual offers based on your personal shopping patterns.
Real-Time Bidding Will Be Key To Driving Share Of Wallet
Brands are competing alongside each other and bidding for shoppers’ share of wallet. The retailer that is able to connect and analyze data to react the fastest will win. To enable this kind of quick and powerful decision-making, all data solutions and services must be carried out in real time. Machines and algorithms that predict shopper needs as they happen will be critical, as static models will no longer keep up with the pace of change. Retailers need to be ready and adapt to these changes, or risk being left in the dust.
Thomas Hill, SVP Retail Services of Kx Systems, is a respected retail and insight professional with a proven track record of developing data strategy, and landing technology solutions within retail and home shopping organisations. Hill currently leads the retail solutions division for Kx, driving forward the innovative use of technology to help retailers gain a competitive advantage from their data. This follows previous roles spearheading customer data strategy and solutions for companies such as Asda and Shop Direct.